Evaluating R&D investment efficiency in China's high-tech industry

Research and development (R&D) investment activity plays a crucial role in developing high-tech industries. In recent decades, China has made sustained investments in its domestic high-tech industries, with the goal of increasing their productivity. This paper investigates the effect of this investment on relative R&D efficiency across China's high-tech sectors. Data Envelopment Analysis (DEA) was used to generate quantitative indices for sector comparisons. The analysis of this study indicates that overall R&D investment efficiency did not increase from 1998 to 2009, despite R&D expenditure increasing by 2188%. Over the same period, most sectors suffered from decreasing returns to scale (DRS), presumably also reflecting the inefficient R&D investment. Most of the sectors showed significant fluctuation on R&D investment efficiency. This research result indicates that the problem of China's high-tech industry may be from the inefficiency of its technology commercialization processes, and therefore represents a critical parameter for policy makers and managers.